Kenneth Rubinstein, “a tax attorney and the man who wrote Antigua’s trust and financial service regulation laws” was interviewed and quoted in the following article in Financial Times

Search for a way through Stanford labyrinth
By Stacy-Marie Ishmael in New York, Financial Times

Published: March 15 2009 18:44 | Last updated: March 15 2009 18:44

Bernard Madoff’s Ponzi scheme, which could be the biggest in history, dwarfs the $8bn fraud of which Sir Allen Stanford stands accused by the US Securities and Exchange Commission.

But only in size. In scope and complexity, the allegations against the Texan billionaire could be in a class of their own.

An update due Monday from Ralph Janvey, the US court-appointed receiver, is expected to shed more light on his struggles to unravel the structure of the Stanford empire.

The SEC has said Sir Allen’s alleged Ponzi scheme operated primarily through his offshore bank in Antigua, but Stanford’s tentacles extended far beyond the shores of a Caribbean island barely twice the size of Washington DC.

The Stanford group of companies comprised, according to a statement issued by the receiver appointed to oversee them, at least 175 entities ranging from banks to restaurants to bullion dealers in more than 100 places including Houston, Montreal, Caracas, Quito and St Croix.

This complex organisation, as well as questions over jurisdiction, have complicated attempts by Mr Janvey to locate and secure the assets of the Stanford Group.

In February, the United States District Court for the Northern District of Texas authorised Mr Janvey to act as receiver for all the assets and records of Stanford International Bank, the Stanford Group Company and Stanford Capital Management.

Unusually, the court also granted Mr Janvey oversight of three of the top Stanford executives – Sir Allen; James Davis, Sir Allen’s chief financial officer and college roommate; and Laura Pendergest-Holt, the group’s chief investment officer – and of all entities they own or control. Sir Allen is the sole shareholder of both SIB and SGC and a majority of the companies that bear his name.

The sweeping motion was met with derision and disbelief by government and regulatory officials in Antigua, where Stanford International Bank and a host of other companies in the group are domiciled.

Local regulators were quick to point out that in the absence of a memorandum of understanding, they were under no obligation to share information with their cohorts at the SEC and set out to deal with the alleged fraud on their own terms.

Antigua is party to a mutual legal assistance treaty, or MLAT, with the US, but this would only be applicable in the event of a criminal probe, according to Kenneth Rubinstein, a tax attorney and the man who wrote Antigua’s trust and financial service regulation laws.

No criminal charges have been filed against Mr Stanford.

“I don’t believe that a US receiver, especially one appointed in connection with a civil complaint, has any claim to Antiguan assets,” he told the Financial Times.

Moreover, three days after Mr Janvey was appointed in the US, the Financial Services Regulatory Commission on the island announced that it had appointed receivers of its own. Nigel Hamilton-Smith and Peter Wastell of Vantis Business Recovery Services, a UK-based company, were to jointly manage the affairs of SIB and the Stanford Trust Company.

But cross-border cooperation has not just been stymied by a lack of legal agreements and Antigua’s uniquely restrictive finance and trust laws. Local politicians have been galvanised into action by what they see as a disregard for the island’s sovereignty.

This month, the Antiguan parliament voted in favour of a government proposal to seize 250 acres of land and properties belonging to Sir Allen, including SIB.

“We have a responsibility to take the necessary action to protect the people of Antigua and Barbuda,” the island’s attorney-general, Justin Simon, said.

Dr Errol Cort, Antigua’s finance minister, added that neither the SEC nor US government officials had made any attempt to contact him or his colleagues. The SEC declined to comment.

Mr Janvey sent letters to every bank and financial institution in the region with a warning that assets they had at SIB or within the Stanford Financial Group should be considered frozen, Dr Cort said.

“These actions require certain preventative attempts to be taken,” the finance minister told the lower house of parliament, which voted unanimously in favour of the motion.